LONDON (SHARECAST) - -Bank of America to pay $2.43bn in settlement
-Nike off on China demand concern
-Poor economic data takes its toll
-Personal income well below forecasts (with revisions)
-Chicago PMI at 3 year low
Dow Jones Industrial: -0.64%
Nasdaq Comp.: -0.61%
S&P 500: -0.65%
Wall Street is moving lower on the last trading day of a quarter which has seen the S&P 500 rise just under nine per cent, no mean feat. Perhaps for that reason, some might be thinking that it is a good day to lock in some profits. Even so, it must be kept in mind that weakness on the last day of a quarter is sometimes a sign of weakness.
This ahead of this evening’s Spanish financial system stress-test results and Moody’s review of the country’s debt rating and following the release of several weaker than expected economic reports.
Sportswear firm Nike last night announced earnings after the bell which came in ahead of expectations, though it faces the hurdle of slowing growth in China. This is now pressuring its shares.
Bank of America agreed to a $2.43bn settlement with investors who suffered losses during its acquisition of Merrill Lynch.
Losses reported last night by Research In Motion, the maker of the still popular but no longer market-leading Blackberry smart-phone, were not bad as feared. In fact, its stock is now bouncing back by 11%, surely on a fair bit of “short-covering” no doubt.
Crown Castle agreed to acquire rights to operate 7,200 cellular towers from T-Mobile USA for $2.4bn, giving the carrier’s owner Deutsche Telekom cash to invest in its US wireless network.
Weak income numbersOn the macro-economic front, US personal consumption expenditures (PCE) in August were up 0.5%, in line with expectations, after rising 0.4% in July.
However, personal income was up 0.1%, slightly below expectations of a 0.2% increase. The July reading was revised to show a 0.1% gain from 0.3% previously. The personal savings rate fell to 3.7% from 4.1% in July.
The Core PCE index rose 0.1% in August, as expected. Core prices were up 1.6% from a year earlier, versus a 1.3% annual increase in July.
The notoriously volatile regional Chicago NAPM manufacturing sector purchasing managers' index for the month of September has come in at 49.7 (Consensus: 53), after a reading of 53 for the previous month. The new orders sub-index has come in at 47.4 (from 54.8) while the prices paid sub-index has printed a reading of 63.2 (after 57).
The University of Michigan's gauge of consumer confidence for the month of September has come in at 78.3 (Consensus: 79) after the previous month's reading of 79.2. The current situation sub-index fell to 85.7 from 88.3 (Consensus: 88), but the expectations component actually rose; to 73.5 from 73.4 (Consensus: 73). Inflation expectations one and five years out dropped noticeably.
Front month West Texas crude futures are now up slightly, by 0.09%, to the 91,93 dollar level on the NYMEX.
10 year US Treasuries are now rising by 13/32 dollars, with yields at 1.61%.
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